When the FSB conducts FSP on-site visits, the supervision agreements for Representatives working under supervision are scrutinised. The supervision plan and the tracking of the supervision activities are also inspected. It is therefore of utmost importance to ensure that these documents are in place and monitored on a regular basis.
In order to operate as a Representatives, you are required to meet the following four Fit & Proper competency requirements.
- comply with the applicable minimum experience requirements;
- have a relevant qualification;
- have successfully passed the relevant Regulatory Examination(s); and
- comply with the Continuous Professional Development (CPD) requirements.
If you are appointed as a Representative, but do not yet meet the above requirements, you will need to operate under supervision until all the above requirements are met.
The requirements that apply to Representatives working under supervision
Date of first appointment
A Representative may only work under supervision for a maximum of 72 months from their date of first appointment (DOFA). There are also minimum supervision periods that the Regulator has allocated and these differ depending on the product subcategory.
If, for business reasons, it becomes problematic for an FSP to provide the Representative with adequate experience within the minimum supervision period, then the FSP must place the Representative in a position to gain the appropriate experience and extend the period of supervision to ensure that the Representative obtains sufficient exposure within the 72-month period.
The supervision period is linked to the category or subcategory for which the Representative has been authorised. Representatives are expected to obtain experience across their applicable subcategories. Representatives who give advice and/or render an intermediary service in multiple categories or subcategories can gain the experience at the same time, and will remain under supervision until the experience requirement of the most onerous category or subcategory is met. If there is a significant interruption of six consecutive weeks (or longer) while gaining supervised experience, then this must be compensated for by arranging an additional period under supervision equal to the period interrupted, providing this does not exceed the maximum supervision period.
Monitoring of Representatives
The names of Representatives working under supervision must be clearly indicated on the Representative Register. Representatives can only be offered the opportunity to work under supervision if their FSP can satisfy the Registrar that they have the required operational ability to do so. The activities of a Representative working under supervision must be monitored by a supervisor within the FSP. A supervisor can be a key individual or a Representative who meets the relevant competency requirements for the specific category and subcategory (product). It must be possible that the normal working relationship of the supervisor and the supervisee allows for the supervision oversight activities as per the supervision agreement which includes regular contact and which may include face-to-face and/or contact via electronic means.
If working under supervision, the following time limits are applicable for obtaining the Fit & Proper Competency requirements:
- First Level Regulatory Exam: by the 30th June after the expiry of 24 months from the date of first appointment.
- Qualification: by the 30th June after the expiry of 72 months from the date of first appointment.
- Second level Regulatory Exam: by the 30th June after the expiry of 72 months from the date of first appointment.
The supervisor is required to supervise the following activities:
- Sign-off by the supervisor of the advice given;
- Pre-transaction sign-off by the supervisor where intermediary services are rendered;
- Attending meetings with the supervisee where financial services are rendered;
- Appropriate post-transaction sampling;
- Confirmation follow-up calls to clients;
- Any other appropriate activities that enable the supervisor to scrutinise the activities of the supervisee.
A supervision agreement must be put in place to set out the activities of the supervisee.
This supervision agreement should cover the following:
- names of the supervisor and supervisee;
- categories and subcategories to which supervision applies;
- responsibilities of the supervisor and the supervisee;
- the supervision plan and its review and sign-off by the supervisor;
- the supervision agreement may or may not be part of the employer’s performance management processes
Two types of supervision
There are two types of supervision. These must be distinguished as follows:
- Direct supervision which involves more hands-on supervision ranging from daily to weekly supervision of the Representative during the first months of the period under supervision. The type of direct supervision is dependent on the subcategories which the Representative is licenced for.
- On-going supervision takes place after the initial direct supervision period is over and continues until the end of the supervision period. This supervision occurs on at least a bi-weekly to monthly basis and would involve sampling of the work done by the Representative.
What are the supervisor’s responsibilities?
- Ensure that the supervisee is always supervised when executing their duties;
- Must ensure that the supervisee has a good understanding of, and exposure to, the relevant categories and/or subcategories;
- Must observe selected meetings between the supervisee and clients;
- Must provide evidence of supervision actions undertaken;
- Must assess the merits of advice given in terms of the General Code of Conduct;
- Must have properly documented evidence of supervision, methods and frequency.
What are the supervisee’s responsibilities?
- Adhere to the requirements of the supervision contract;
- Provide the supervisor upon request with relevant documentation relating to their supervision;
- Disclose to clients that he/she is acting under supervision;
- Actively pursue the completion of the required qualifying criteria within the prescribed limits;
- Undertake the relevant product training;
- Request guidance from the supervisor if in doubt.
It is evident that the Registrar is stringent in the monitoring process which must be followed for Representatives who work under supervision. FSPs must therefore ensure that these processes are documented and continuously monitored by the key individual and/or supervisor. Masthead has developed documentation to assist FSPs with the monitoring process.
If you require any assistance with the supervision process, please contact your Masthead regional office to speak to your compliance officer.